The author is a Forbes contributor. The opinions expressed are those of the writer.

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Okcoin and Huobi, two leading Chinese cryptocurrcency exchanges, have unveiled their Bitcoin wealth management schemes recently. Right now both only take deposits from invited users, but at least in the case of Huobi, such restriction will be lifted at the end of the month. Apparently the two exchanges have put a great amount of effort in preparation for the services, for instance, both registered their investment subsidiaries in Hong Kong. Given that neither sites are charging fees from regular trading, this new investment scheme can be their hope to turn a profit.

This, however, can be a cause of concern for anyone who cares about the future of Bitcoin and here is why:

The revolutionariness of Bitcoin is that it removes the necessity of a banking system by offering owners safe way to store and transfer value. Such arrangement by design reduces systemic risks – in a scenario of financial crisis, the closure of one bank can often lead to massive bank runs, which is something that we don't expect to happen in the Bitcoin world, at least theoretically. While the idea of a Bitcoin bank that take in deposits and pay fixed interest may sound appealing for those who don't want their coins to sleep in their wallets, it carries the peril that may prevent Bitcoin from living up to its name as a decentralized currency.

Bitcoin Banking In China

In China, the first Bitcoin banking service is Bitcoinsand. Its founder Li Xiaolai is an early Bitcoin investor, Bitcoin evangelist and venture capitalist. Despite Li’s renown, considerable suspicion was cast on the “first online bank for bitcoins” in the wake of the site’s launch in August 2013.

The suspicion has to do with Li’s rumored wealth. Although it remains a mystery how many Bitcoins Li actually owns, the number is widely believed in excess of 100,000 btc – such claim, though quite impossible to verify, was never denied by Li in public. In multiple occasions, Li said that he had converted his wealth into paper wallets, which were kept in overseas banks. Such a statement leaves one to wonder: If some one has that such a large wealth sleeping in the vaults, why would he bother to borrow a relatively small amount? Moreover, since Bitcoinsand claims to be a “bank”, assumedly the coins were lent to people who were willing to pay higher interest rates – but who would borrow a highly volatile currency whose real world use is still limited and pay more than 5 percent a year? Naturally, fingers were pointed to the short-sellers. Actually, there had been sporadic rumors that the founder himself was involved in shorting – Li was one of the first who posted on social media about the central bank ban last year.

Despite the controversy, Bitcoinsand has been running for nearly a year with no serious complaints and suspicion gradually subsided.

But this year, Bitcoin banking services seem to grow into a trend. Aside from the above-mentioned three, there is another similar service called Kipcoin.com. Kipcoin, which went online this May, sets its fundraising cap at 10,000 btc and pays an interest of 0.0137% daily. Media coverage indicates that the site makes money in two ways: 1. Arbitrage - buying from exchanges where prices are lower and sell at others where prices are higher. 2. Lend the coins to miners.

While I personally doubts that arbitrage can be long-term sustainable as market efficiency keeps increasing; the later seems to be relatively legitimate given that China had one of the most stringent laws regarding pirate fundraising, a crime punishable by death and building Bitcoin farms requires increasing amount of resources. Bitcoins offers a way to work around the law; moreover, many overseas mining equipment vendors see Bitcoin as the currency of choice.

Why I Won’t Trust My Coins To The “Banks”

I was attracted by Bitcoin much due to my disappointed experience dealing with banks. For the same token, I don't quite like Bitcoin exchanges. Even though I bought my coins through these exchanges and traded occasionally, I never leave more than a couple in my trading accounts, especially after the Mt. Gox debacle, when hundreds of thousands of coins just vanished into thin air. Will 5% or higher annual return enough incentive for me to change my policy? I don’t think so. After experiencing several boom-bust cycles, seeing my coin’s value rising and falling is something that I can live with, but losing them for over-trusting is something that I just can’t forgive myself doing.